In early 2010, two similar earthquakes struck Haiti and later, Chile. The difference in loss of life was stark. This column points to the importance of well-governed and economically developed cities for coping with natural disasters and climate change. The authors propose a novel idea – charter cities built from scratch in the world’s poorest countries with their own rules and, hopefully, their own fast track to development.

There is considerable uncertainty about how climate change will affect different nations, but there is little doubt that the challenge of adaptation will be more difficult for families in the developing world. These families would benefit from more and better choices about where to live and work in the face of climate shocks.

The human toll from the January 2010 earthquake in Haiti was enormous. One month later, a more severe earthquake in Chile resulted in much less damage and many fewer deaths. The comparison is a stark reminder of the important role that governance and economic development play in mitigating damage from disasters. In relatively rich countries, access to wealth, medical care, good governance, and cutting-edge information technology means that even families in geographically disadvantaged areas will have a range of strategies for coping with drought, floods, heat waves, and other shocks from climate change. In less-developed regions, the lack of access to climate coping mechanisms will constrain peoples’ ability to adapt, and enhance the risk of humanitarian crises.

It is this lack of access, rather than a lack of awareness, that makes millions of Bangladeshis living below sea level particularly vulnerable to climate change. The same goes for sub-Saharan Africa, where experts warn that rising temperatures could lead to hundreds of thousands of deaths in civil conflicts over scarce food, water, and arable land (Burke et al. 2009).

Climate refugees

The potential for conflict or displacement resulting from climate change has many observers distressed about ‘climate refugees’ – people who cross national borders to escape climate shocks in search of more resilient locales (Conley and Werz 2012). Though the prospect of ‘climate refugees’ is alarming, climate-induced migration can actually play an important role in reducing the probability of ugly civil conflicts in the first place. If people have safe and reasonably well-governed places to go, greater migration can greatly reduce the humanitarian cost of climate change.

To see why, consider the options available to a family in Phoenix. If they find the weather too hot or the water too scarce in Arizona, they can move somewhere like Minneapolis, a well-run, climate-resilient city that is more than capable of accommodating new residents. This ability to “vote with one’s feet” will act as a type of insurance policy, another tool for coping with a hotter future. Though some Phoenix residents, such as the elderly, will likely face higher migration costs, their mobility constraints won’t stop them from making use of services like medical care and local government, or goods like air conditioning and refrigeration, to offset the effects of climate exposure.

Of course, the options in Phoenix are very different from those in Dhaka. Though many families at risk in the developing world will find resourceful ways to move if the need arises, cities like Minneapolis are probably not an option. Whether or not you believe, as we do, that these families deserve better migration opportunities, the lack of better options is not going to keep them from making do with the not-so-good options they have – options that in many cases will lead to slums, the informal peripheral settlements in the developing world’s rapidly growing urban areas.

Adapting to change

In the next few decades alone, the UN expects cities in less-developed regions to add nearly three billion residents (UN 2009). In too many of these growing cities, the system of local governance may be too weak, corrupt, or indifferent to provide adequate services to existing residents, let alone impoverished newcomers. Without clean water and sanitation, growing slums will exacerbate the risk of contagious diseases such as cholera. Without basic urban infrastructure, families living in slums will be particularly vulnerable to flooding and other climate shocks.

Despite such risks, slum conditions will actually represent an improvement for many migrants – the best among bad options (Brand 2006). Yet, there are ways to offer families a better set of choices, to expand the number of reasonably well-governed cities that are ready and willing to accommodate migrants in search of a better life.

For starters, the borders of the world’s relatively rich countries could stand to be a bit more welcoming to immigrants. Accepting more immigrants in rich countries would relieve some pressure in the developing world, but even if all rich countries adopted the relatively generous immigration rules of Canada, where annual immigration per capita is twice that of the United States, the scale of poor-to-rich country migration would remain fairly limited.

Cities in less-developed regions could help the coming wave of urban residents by implementing reforms and making way for efficient urban expansion. Some developing world cities will succeed in doing so, fostering inclusive and sensible paths to growth that leapfrog the mistakes of cities in richer countries. Yet, the difficult process of building consensus for reform can take many decades, and urbanisation and climate-induced migration will not necessarily wait around for reformers to keep up.

Charter cities

Charter cities – a new type of special reform zone – offer another option (Fuller and Romer 2010, Romer 2010). Developing countries can, in partnership with credible foreign governments, use reform zones to try systems of governance that are known to work well. By starting on an undeveloped site, the formal rules in a charter city, and the norms that these rules encourage, can differ markedly from those that prevail elsewhere in the country. These rules can nevertheless be legitimate in the eyes of those who choose to move to the zone, just as the rules in high-income countries are legitimate in the eyes of the immigrants who manage to gain access.

Honduras is pioneering a path that is based in part on the charter cities concept (Economist 2011). The Honduran Congress recently defined a new legal entity, known locally as la Región Especial de Desarrollo (RED).1 Though part of sovereign Honduran territory, the RED will have a high degree of autonomy as well as the ability to enter into agreements with foreign governments. For example, the RED will have its own police force, court system, and tax and customs authority, each of which can be run with cooperation from foreign government agencies or, in the case of taxes and customs, a reputable non-profit such as Crown Agents.

Honduras intends to establish the RED on an undeveloped site that is large enough to one day host a city of millions. Families will be free to choose - those who want to try the new legal arrangement in the RED will move in, those who are skeptical can observe the experiment from afar but retain the option of moving in later if they like what they see.

As an example of the potential for collaboration, the Supreme Court in Mauritius has agreed in principle to act as a court of final appeal for cases from the RED. Among other benefits, the ability to appeal to an internationally respected court will help to assure residents and investors that the RED government will respect rights and contracts. International firms will therefore be more likely to work with authorities in the RED to provide the sorts of urban infrastructure that enhance the climate-resilience of well-run cities.

Another feature of governance in the RED is a Transparency Commission, an oversight body of nine foreigners to which credible partner governments can appoint members. The Transparency Commission has the power to audit all aspects of government performance in the RED and, if necessary, to replace an ineffective executive. In the fledgling development, the Transparency Commission will play a key role in preventing the kind of corruption that might otherwise lead to the chronic under-provision of basic city services, services that are essential in their own right but even more so in the face of disruptive climate shocks.

The way forward

By exploring mechanisms that allow people to try rules that are known to work better, Honduras is striving for a future where even the world’s poorest families have better choices about where to live and work. Other countries should take note - a world in which more people can vote with their feet bodes well not just for climate change adaptation, but also for good governance, economic prosperity, and human development.